masteff

When I was in plan admin at a very large employer, our document contained language about "to comply with a court order". I don't have a copy of the plan to know the precise context (in-service, hardship, etc) of where that was. Back of my head, it was in the list of exceptions to no in-service before 59 1/2. In theory (can't remember if I ever did it in practice), someone could have had a simple court order to pay $X to so-n-so and we'd have a processed it. BUT the participant would have been on the hook for the taxes and early distribution penalty. A key advantage for using a QDRO is that it transfers the liability for taxes to the alternate payee.

Just talking out loud... 1) it would be different if you didn't have knowledge that she intends to take student loans. 2) at the end of the day, what would matter on IRS audit is that the file clearly documents the amount of need and does not document anything adverse (such as sallie mae).

If they had annual entry, I could see doing it as a one-time special eligibility with a one-time special entry date. But I can't get past the point that 'hr for me' made above about them having quarterly entry dates and how can they be eligible for the special entry but not for the next quarterly entry (assuming less than 1 YOS).

Note that you have to be careful about which 5-year clock you're talking about as there are actually 2 separate ones. You might read the discussion in this thread (the last time I fully wrapped my head around the topic): http://benefitslink.com/boards/index.php/topic/50668-in-plan-roth-rollovers/

I think the "two days" is because in post #1 the letter said plan was terminating as of 4/30 and they got the letter yesterday which was 4/28. This however does not mean that participants' accounts will cease to exist at 11:59pm Saturday. See the 3rd bullet on this IRS webpage: https://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Plan-Termination You will want to figure out where you want to do a rollover of your account to. If your new employer is not providing a retirement plan, you will likely want to look at opening an IRA to receive your rollover from your 401(k). I encourage you to research rollovers and IRAs so you can make an informed decision.

Page 4 here: https://www.irs.gov/pub/irs-wd/0110034.pdf says "A distribution upon death will not be covered by this transition rule unless the information in the designation contains the information ... with respect to the distributions to made upon the death of the employee." The way I read that, if the 242 designation didn't address it, then you revert to 401(a)(9). Given your question #'s 2 and 3, I suspect the designation didn't address death? Note that you might look at Reg 1-401(a)(9)-8 Q&A-16 as referenced by this PLR on the timing of the first distribution https://www.irs.gov/pub/irs-wd/0510035.pdf But I'll leave it to your judgment on how those references apply to this set of circumstances.

A change in residence such that the participant becomes out of network in the PPO is given as an example in the regs. If you don't have an HDHP but add one, that would count as a coverage change. Likewise if you had a significant change in cost mid-year (such as if your renewal was mid-year rather than calendar). I'll leave it to greater minds on whether other status changes would permit a change in plan option.

I'm probably getting out of my depth with this question but what about amending the plan to freeze participation to reflect what has been done in practice for the last several year?

When I was in corporate employee benefits, our SPD clearly stated that deferral elections were not valid until submitted and accepted on the proper form (in our case, that form was online via our trustee/recordkeeper's website). So I might suggest seeing what your plan documents say. Then the appropriate action, which you appear to have started, is to review your and your provider's records to find any trace of such an election but if neither you nor the payroll provider find such, then the burden is on the employee to prove they properly submitted it. Improperly submitted elections are invalid.

There was an old thread on this and somebody named masteff provided a code cite on how retiring prior to 12/31 would trigger RMD rollover rule for the calendar year. (Reg 1.402(c )-2 Q&A-7) http://benefitslink.com/boards/index.php/topic/55090-rmd-v-in-service-non-owner/

Reg 1.72(p)-1 Q&A-20 Q-20: May a participant refinance an outstanding loan or have more than one loan outstanding from a plan? A-20: (a) Refinancings and multiple loans--(1) General rule. A participant who has an outstanding loan that satisfies section 72(p)(2) and this section may refinance that loan or borrow additional amounts if, under the facts and circumstances, the loans collectively satisfy the amount limitations of section 72(p)(2)(A) and the prior loan and the additional loan each satisfy the requirements of section 72(p)(2)(B) and © and this section. For this purpose, a refinancing includes any situation in which one loan replaces another loan. (2) Loans that repay a prior loan and have a later repayment date. For purposes of section 72(p)(2) and this section (including the amount limitations of section 72(p)(2)(A)), if a loan that satisfies section 72(p)(2) is replaced by a loan (a replacement loan) and the term of the replacement loan ends after the latest permissible term of the loan it replaces (the replaced loan), then the replacement loan and the replaced loan are both treated as outstanding on the date of the transaction. For purposes of the preceding sentence, the latest permissible term of the replaced loan is the latest date permitted under section 72(p)(2)© (i.e., five years from the original date of the replaced loan, assuming that the replaced loan does not qualify for the exception at section 72(p)(2)(B)(ii) for principal residence plan loans and that no additional period of suspension applied to the replaced loan under Q&A-9 (b) of this section). Thus, for example, if the term of the replacement loan ends after the latest permissible term of the replaced loan and the sum of the amount of the replacement loan plus the outstanding balance of all other loans on the date of the transaction, including the replaced loan, fails to satisfy the amount limitations of section 72(p)(2)(A), then the replacement loan results in a deemed distribution. This paragraph (a)(2) does not apply to a replacement loan if the terms of the replacement loan would satisfy section 72(p)(2) and this section determined as if the replacement loan consisted of two separate loans, the replaced loan (amortized in substantially level payments over a period ending not later than the last day of the latest permissible term of the replaced loan) and, to the extent the amount of the replacement loan exceeds the amount of the replaced loan, a new loan that is also amortized in substantially level payments over a period ending not later than the last day of the latest permissible term of the replacement loan.

While the brother may benefit if the hardship is approved, you would not be granting it for the brother; you'd be granting it for participant to prevent the participant's eviction from the participant's principal residence as Peter discussed above. Double check how the hardship language is worded in your specific plan documents but I agree w/ Peter that the focus of analysis should be on the participant's eviction from the participant's principal residence. I would want to look at several factors such has how long as the participant lived there.

1099-MISC has corresponding language on page 3 and seems to indicate the use of box 3. https://www.irs.gov/pub/irs-pdf/i1099msc.pdf This article also indicates nonqual death benefits should be in box 3. http://www.equiasinsights.com/issue-1-2012-tax-update/payments-to-beneficiaries I think you need to find out more about the type of plan that made the distribution. And likely push back on them to verify box 7 vs box 3. Edit: but part of the 2nd link speaks to what QDROphile posted just above me about the special rule on FICA.

The code only provides that you test for 5% ownership "with respect to the plan year ending for the calendar year in which the employee attains age 70½". This is generally interpreted to mean that if you're not a 5% owner in the year you attain 70 1/2 then you do not become one subsequently for purposes of Code section 401(a)(9). From 401(a)(9):

Proposed strategy makes sense to me. From what little reading I've done just now: If we could go back in time, we'd treat the $8000 as a Roth conversion, put it in a Roth account and then immediately recharacterize it back to a traditional IRA. But the proverbial cat is already out of the bag.